And as a computational physicist I think the thing that probably annoys me most about all of this is the amount of CPU time which is going to be wasted before this particular bubble ends. I could be using those millions of CPU hours to actually do stuff, y'know.

Agreed - it would be really great to be able to have a currency that gets issued to the solver of protein folding problems or something, but unfortunately I don't think those solutions have as nice mathematical properties as spinning and computing SHA hashes all day.. : )

I think the BitCoin community would be interested if you could combine folding@home, say with BTC. It seems possible to me, but of course, you'd need to be able to verify the work quickly. I agree it would be nice to do something useful with the GPU/CPU time.

The total ammount of BTC is fixed and so at some point it won't be worth it to allocate any more computing resources to it.

Even right now, I doubt you can just grab a high end GPU and get cranking for a profit, unless you manage to steal electricity or steal access into a computer you don't own.